Why Markets Matter
Investor Insights - Monthly news for investment professionals October 2015

On 27 April 2015, the S&P/ASX 200 share price index closed at 5,982.70. Sentiment was strong. This was the highest result since the global financial crisis. Commentators were suggesting an imminent surge in prices as the market approached the psychologically-important 6,000 mark. Prices had been steadily increasing over a six year bull run from the post-GFC nadir of 3,145.50 on 6 March 2009. Was it possible that we could again approach the all-time highs of 6,748.90 seen immediately before the GFC on 12 October 2007?

History shows that none of this occurred. Instead, the share market has since steadily fallen, even closing the day on 23 September at below 5,000 (4,998.10)! Investors who entered the market in April have seen an almost immediate 20% capital loss.

Source: Yahoo7

So what were the factors that led to this extraordinary performance?

  • First, in twelve months to April, the stock market had increased over 10%, but company earnings had fallen by 6.7% - there was a sense that company valuations had become stretched.

  • Secondly, 10 year bond rates had also fallen over that period from 4% to less than 2.4% p.a. – were stock market valuations being held unsustainably high by the lowest interest rates in history?

Commentators will pick over the bones and argue the reasons. For our investors, this episode reminds us of three of the perennial truths of investment:

  1. No one – not even experts – can ‘time’ the market. Markets are unpredictable and volatile by their very nature. Anyone who could accurately predict future market movements would quickly become very wealthy indeed. La Trobe Financial’s offerings take the issue of timing off the table, focussing on reliable income, paid monthly.

  2. Protecting your capital matters. As Warren Buffett says, the first rule of investment is do not lose your money. The second rule is do not forget the first rule. Those investors who piled into the market in April will need a 20% increase in stock market values before they break even. This is particularly damaging for investors who need to draw down on those investments to meet living expenses. La Trobe Financial’s offerings are designed to provide capital stability, along with reliable monthly income.

  3. Whilst stock markets frequently promise excitement and premium returns, they also entail significant risk. In our view, there is a place in portfolios for steady, reliable performers like the La Trobe Australian Credit Fund.

Introducing our new PDS

It has arrived! On 23 September 2015, La Trobe Financial launched its new and updated . This continues our tradition of regular, generally annual, PDS updates. Whilst annual updates are not required by law, La Trobe Financial has long seen the benefit in the corporate discipline involved in keeping such an important document as fresh and relevant as possible.

The following are some of the key questions relating to the new PDS:

Remind me – what is a PDS?

A PDS is a document that contains information about a financial product. That information can include significant benefits and risks of the product, costs of the product and fees and charges received by the product issuer. The purpose of this document is, of course, to help investors make informed decisions about whether to make or hold an investment.

Why has La Trobe Financial issued a new PDS?

There is no legal obligation for a fund manager to update its PDS annually. However, at La Trobe Financial we have long taken the view that a regular update (generally annually), is an important corporate discipline that ensures we keep this important document as fresh and relevant as possible. What’s more, it allows us to add refinements and enhancements that keep the investment process as simple as possible.

What are the key changes in the new PDS?

The first thing that you will notice is that the new PDS launches a new name for the Fund – the La Trobe Australian Credit Fund. The name change reflects our long-held belief that the phrase ‘mortgage fund’ is both inaccurate and unhelpful. It is inaccurate in that a mortgage is collateral taken to secure a credit investment (a loan), not an investment in itself. It is unhelpful in that it can encourage investors to focus solely on the security property, rather than taking all of the circumstances of a loan into account. What’s more, ‘credit’ more accurately describes the expanded range of investments that we are intending to launch in the coming months through the High Yield Credit Option to sophisticated and wholesale investors.

As well as the name change, the new PDS includes a range of enhancements that are designed to make investing easier. The application form has been enhanced and simplified. Regulatory changes relating to investor identification and US taxation have been incorporated. The ‘third party access’ process has been enhanced and streamlined.

All things considered, we are very proud of our new PDS and are pleased to report that it is already receiving very favourable feedback in the market.

Market update and investor briefing

Invest 30 minutes of your time to hear from our quarterly market update and investor teleconference.

We will discuss the domestic and international economy, with our “headwinds and tailwinds” analysis. We will also update you on the Australian property market and values.

Event Details

Date: Thursday, 15 October 2015



12:00pm - 12:30pm  (AEST)
  QLD 11:00am - 11:30am  (AEDT)
  NT 10:30am - 11:00am  (ACST)
  SA 11:30am - 12:00am  (ACDT)
  WA 10:00am - 10:30am  (AWST)


Connect through your computer or by telephone

Further details will be provided on registration.

Best regards,

Chris Andrews
Vice President,
Chief Investment Officer

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Ratings And Awards

The above awards and ratings were given to the Pooled Mortgage Option within the La Trobe Financial Credit Fund and may be viewed

La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Credit Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. The PDS is available on our website www.latrobefinancial.com or by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you.

- The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund and may be lower than expected. Investors risk losing some or all of their principal investment. The investment is not a bank deposit.
- Past performance is no guarantee of future performance.
- Withdrawal rights are subject to liquidity and may be delayed or suspended.
- The award and ratings were given to the Pooled Mortgages Option within the La Trobe Australian Credit Fund.
- Any rating is only one factor to be taken into account in deciding to invest.

1. Zenith's "recommended" rating indicates that it has high confidence in the manager meeting its objectives. The Zenith Investment Partners ("Zenith") ABN 60 332 047 314 rating referred to in this document is limited to "General Advice" (as defined by section 766B of Corporations Act 2001) and based solely on the assessment of the investment merits of the financial product on this basis. It is not a specific recommendation to purchase, sell or hold the relevant product(s), and Zenith advises that individual investors should seek their own independent financial advice before investing in this product. To view the relevant research information, please visit www.latrobefinancial.com The rating is subject to change without notice and Zenith has no obligation to update this document following publication. Zenith usually receives a fee for rating the fund manager and product against accepted criteria considered comprehensive and objective.
2. SQM Research - 4 stars to 4.25 stars - superior, suitable for inclusion on most Approved Product Lists. To view the relevant research information, please visit www.latrobefinancial.com This rating will not take into account your, or your clients' objectives, financial situation or needs. It is up to investors to consider whether specific financial products are suitable for your objectives, financial situation or needs. Research houses receive a fee from La Trobe Financial for rating the product.
3. Lipper Leaders Rating Total Return (Score – 5) Lipper Ratings for Total Return reflect funds’ historical return performance relative to peers. The ratings are subject to change every month. The highest 20% of funds in each peer group are named Lipper Leader or a score of 5 for Total Return. Lipper Leader ratings are not intended to predict future results and does not guarantee the accuracy of this information. More information is available at www.lipperweb.com. Thomson Reuters Copyright, All Rights Reserved.
4. Australia Ratings (AFSL 346138) makes every effort to ensure the reliability of the views and rankings expressed in its reports and those published on its websites. Australia Ratings research is based upon information known to it or which was obtained from sources it believed to be reliable and accurate at time of publication. However, like the markets, it is not perfect. This report is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore discuss, with their financial planner or advisor, the merits of each rating for their own specific circumstances and realise that not all investments will be appropriate for all subscribers. To the extent permitted by law, Australia Ratings and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information within the report whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Australia Ratings hereby limits its liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.
La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Credit Funds under AFSL 222213. It employs over 150 staff and has managed over AUD$10 Billion covering over 100,000 investment grade assets since inception in 1952.

Copyright 2014 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial.

La Trobe Financial Services Pty Limited - Australian Credit Licence Number: 392385
La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213

This publication does not constitute financial advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek your own financial or other professional advice before acting or relying on any of the content.
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